There is just no slowing graphics chipmaker Nvidia Corporation (NASDAQ:NVDA), with shares pushing up and out of a two-month consolidation pattern with a move up and over $170 per share. This extends an epic uptrend out of the 2015 low of $18.71 as the success of the GTX 1080 video card as well as the company’s exposure to hot “new tech” areas like machine learning and autonomous transportation.
With nearly a 10-fold price gain over the last two years already in the bank, the stock looks ready for more.
The company will next report results on Aug. 10 after the close. Analysts are looking for earnings of 70 cents per share on revenues of $1.96 billion. When the company last reported on May 9, earnings of 85 cents per share beat estimates by four cents on a 48.7% year-over-year growth in revenues to $1.94 billion.
In a note to clients on July 30, RBC analysts laid out the bullish thesis focusing on three legs of secular growth: AI, VR, and autonomous driving. Other supports include exposure to data center growth and the rise of cryptocurrencies. They are targeting a base-case share price of $175 and an upside scenario of $250 — which would be worth a 46% gain from current levels.
The upside scenario would see ongoing success in the PC gaming segment (with double-digit sales growth) with ongoing uptake in the data center and automotive segments (100%-plus year-over-year growth). This scenario would target earnings of $5.50 per share in fiscal year 2019.
Risks to the outlook would be a slowdown in PC demand from an already flattish trend, macroeconomic pressures, and a worsening of the recent slowdown in automotive sales.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
